Gasoline up by 10.65/liter, diesel by 10.55 today

Geopolitical events overseas have triggered anew an increase in the pump price of gasoline by 10.65 per liter, diesel by 10.55 and kerosene products by 10.70 per liter effective 6 a.m. today.

Those who sent notices of price adjustments were Pilipi-

nas Shell Petroleum Corporation, Flying V, Seaoil, and Total Philippines.

Independent Philippine Petroleum Companies Association (IPPCA) Chairman Fernando L. Martinez explained the pump prices are on “moderate increase” this week due to recent political turbulence in Venezuela and the Middle East.

This has been aggravated by the enforced prohibition on export of Iranian oil and the slashed oil inventory of the United States.

He noted that the recent decision of the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led alliance had not been able to offset the upward price pressure triggered by geopolitical stresses in the market.

In fact in the international market, warnings have been raised that this month, global oil markets are seen heading to the critical US$85 per barrel price level due to the confluence of factors such as the production crunch in Venezuela, rising tension in the Middle East, the war in Yemen, Iran sanctions as well as rising oil demand.

This is the assessment of global oil expert and IHS Markit Vice Chairman Daniel Yergin on the sidelines of the World Gas Conference in Washington DC last week.

Yergin noted “Venezuela will bring in geopolitical and fundamental risks at the same time,” while emphasizing that “a couple of years ago, Venezuela was 2.5 million barrels a day; today it’s about 1.4 million. Next year, it could be as low as 800,000 barrels a day.”

“It’s really tightening in Venezuela, in terms of companies trying to find arbitration seizing Venezuelan assets,” he added

Snipped supply from Venezuela nevertheless, could be given a viable offset from additional capacity that could be infused by the oil kingdom-producer as well as of the United States. “That’s a counterbalance (Saudi Arabia’s spare capacity). At these price levels, everything goes,” Yergin said, noting “the US will also be adding 1.2 million to 1.4 million barrels a day to world supply.”

Overall, rising oil prices will take its pinch on economies, primarily the heavy importers that generally includes major markets in Asia.

Yergin acknowledged that the ‘oil pricing territory’ had already turned into a very complicated terrain with many actors having their hands dipped into how cost swings will shape globally.

“The complicated thing is: it’s not just OPEC (Organization of the Petroleum Exporting Countries), it’s not just non-OPEC, it’s Saudi Arabia and Russia and other countries, so there’s a more complex process of negotiations,” Yergin stressed.